RBA holds the cash rate in shock rate decision
Homeowners were hoping for another month of relief, but the RBA has held the cash rate.
The RBA has held the cash rate in July, despite most experts predicting a cut.
The cash rate will remain at 3.85%.
Most economists predicted a rate cut
88% of Finder's panel of experts predicted that the cash rate would hold this month due to consistently low inflation.
But even if the predicted 0.25% rate cut had happened, some expected that it wouldn't have helped borrowers anyway.
Real estate agent comparison service bRight Agent warned that just one cut wouldn't make everyone "jump for joy".
Co-founder Aaron Scott said: "A July cut [was] still not likely to be enough to give most mortgage holders a meaningful reprieve.
"Unless you've got half a dozen cuts lined up, one drop in rates won't move the needle on most household budgets."
Finder's research shows that 34% of homeowners struggled to pay their mortgage in June.
So why was the cash rate put on hold?
Inflation is well within the RBA's target range at 2.4%. In her statement announcing the cash rate decision, Michele Bullock did acknowledge the low level of inflation, but said the board needed a little more information before making any further cuts.
"She pointed to uncertainty in the global markets which she said increases the risk of lower spending," the statement read.
"The Board continues to judge that the risks to inflation have become more balanced and the labour market remains strong. Nevertheless it remains cautious about the outlook, particularly given the heightened level of uncertainty about both aggregate demand and supply."
The impact of an RBA rate cut
Another 0.25% cut to the cash rate would have lowered the current lowest interest rate in Finder's database to 5.09%.
Two-thirds of experts expect the rate will be cut in August.
The average new home loan value in Australia was $659,920 in the 3 months to March 2025. On a 30-year home loan at the current lowest rate of 5.34% would mean monthly repayments of $3,681 per month. On a rate of 5.09% that would be a monthly repayment of $3,579. That's a $102 month difference, or $1,224 a year. (Fingers crossed for August!)
Rate cuts will also have an impact on property prices. Finder's go-to panel of economists believe prices will rise 4.9% over the next 12 months thanks to housing supply and increased demand of the back of the rate cuts.
What to do now
Although the RBA has not given homeowners any relief this month, it doesn't mean you're stuck on your current rate.
We're still expecting interest rates to fall throughout the rest of the year, which means it's a really competitive rate market at the moment.
Compare rates now and see if you can get a better deal.
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